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This guidance for landfill site operators reflects provisions in Parts 3, 4 5 and Schedule 1 of the Landfill Disposals Tax (Wales) Act 2017 (LDTA).

Organisation:
First published:
13 April 2018
Last updated:

This guidance provides:

  • an overview of how tax is charged and the 3 tax rates (standard, lower and unauthorised)
  • requirements for disposals chargeable at lower rate (qualifying materials or qualifying mixtures of materials: fines)
  • requirements for loss on ignition testing
  • information on penalties that may apply and those specific to the loss on ignition testing regime

References to ‘you’ or ‘your’ are for the landfill site operator. ‘We’, ‘our’ and ‘us’ refers to the Welsh Revenue Authority (WRA).

‘Mixtures of fines’ mean a mixture of materials consisting entirely of fines.

When consulting all the guidance in this section, please read in conjunction with the Qualifying mixtures of materials: fines notice (‘fines notice’).

LDTA/4010 Calculation of tax chargeable

Landfill Disposals Tax is calculated on the basis of the weight of disposed material. The amount of tax to be charged will be calculated by multiplying the weight of the material (in tonnes) by the tax rate.

The tax rates and bands are set by the Welsh Government and approved by Welsh Parliament.

A taxable disposal at an authorised landfill site will be charged at the standard rate unless the material being disposed of consists entirely of one or more qualifying materials, or is a qualifying mixture of materials, in which case the lower rate is charged.

A taxable disposal made at a place other than an authorised landfill site will be liable to be charged at the unauthorised disposals rate. This is regardless of the nature of the material disposed of and whether it would otherwise be subject to the standard rate or lower rate if disposed of at an authorised landfill site.

LDTA/4020 Qualifying material

Disposals of entirely qualifying material at an authorised landfill site will be charged at the lower rate if all the following 3 conditions are met:

If the material contains any other material not listed in Schedule 1 LDTA it will not be qualifying material and you should refer to LDTA/4030.

Entirely qualifying material must be from one or more of the following groups:

  • naturally occurring rocks and soil
  • ceramic or concrete material
  • processed or prepared minerals
  • furnace slags
  • ash
  • low activity inorganic compounds
  • calcium sulphate (when disposed of at a site that is authorised to accept non-hazardous waste only and when disposed of in a cell that does not contain any biodegradable waste), and
  • calcium hydroxide and brine (when disposed of in a brine cavity)

It’s essential you read Schedule 1 LDTA as it contains further information about what is and is not included in the above categories.

To qualify for the lower rate, there must be a written description of the material meeting the requirements of section 34 of the Environmental Protection Act 1990 (EPA) where a waste transfer note is required by that provision. The waste transfer note, also known as a Duty of Care (DoC) note, must contain the information that demonstrates that the Schedule 1 requirements are met. 

Note that references to waste classification descriptions and codes alone are not sufficient to support a claim to the lower rate.

Example 1

A description of ‘17 05 04 – Soils’ on a waste transfer note would be insufficient to establish the material qualifies for lower rate on its own.

In most cases where or how the waste arose and details of any pre-treatment or processes that have been applied to the material will also be relevant.

Example 2

‘17 05 04 – Naturally occurring sub-soil from site x’, is likely to contain sufficient information for it to be determined the material is likely to qualify for the lower rate, subject to it passing other pre acceptance checks such as visual inspection when it is received at the site.

In addition, written descriptions are expected to meet the requirements in the Waste Duty of Care Code of Practice and the specific requirements for landfill in paragraph 4.4.

However, please note that the LDT requirements do not replace your obligations in relation to the written description under environmental law.

If no written description is required under section 34 EPA, we’ll require other evidence to demonstrate that the material meets the relevant requirements.

For example, this could include information from:

  • details of the source and how the waste arose
  • site investigation reports
  • details of any pre-treatment, such as trommel or screening
  • details of any source segregation, for example the waste producer’s procedure
  • results of any waste tests, such as Waste Acceptance Criteria (WAC)
  • photographs of waste in situ, where it arose and/or at point of disposal

LDTA/4030 Qualifying mixtures of materials

The lower rate applies to the disposal of a qualifying mixture of materials. For waste material to be considered as a qualifying mixture of materials, it must meet the below requirements.

Requirements

  • The materials that make up the mixture are qualifying materials which meet the above requirements in LDTA/4020 and no more than an incidental amount of non-qualifying material.

    This means that:
    • the volume and weight of the non-qualifying material in the mixture should be insignificant.
    • its impact on the nature and composition of the load should be insignificant, and
    • its presence should be accidental and unavoidable, rather than deliberate.
    • the difficulty in separating qualifying from non-qualifying material is relevant in assessing whether the small amount of non-qualifying material is incidental, but this reason alone is not enough in isolation
       
  • If a written description of the mixture is required under section 34 of the Environmental Protection Act 1990, the description is sufficient to determine whether the materials that make up the mixture are qualifying materials and a small and incidental amount of non-qualifying material. If a written description is not required under section 34, there must be sufficient other evidence to show this.
     
  • There must be no deliberate mixing of qualifying and non-qualifying waste streams for the purposes of disposal. In this context, it will be important for you to demonstrate the steps that the waste processor takes to separate qualifying and non-qualifying waste streams and to store them separately. It’s good practice for you to familiarise yourself with these processes, for example, by carrying out regular on-site inspections and documenting the steps taken to separate waste streams.
     
  • The mixture must not be hazardous waste within the meaning of the European Waste Directive. This will be assessed against Waste classification technical guidance WM3, with which you must already comply. If the assessment shows the waste is hazardous within the meaning of the European Waste Directive that load will be chargeable at the standard rate. You should review evidence of non-hazardous classification and be satisfied that it appears to be a true and accurate assessment. A copy of this evidence should be retained by you.
     
  • There must be no tax avoidance arrangement in respect of the mixture.
     
  • If the mixture consists entirely of fines (as defined in LDTA/4040), all requirements in section 17 LDTA must also be met for it to be eligible for the lower rate of tax.

LDTA/4040 Qualifying mixtures of materials: fines and loss on ignition test

‘Mixtures of fines’ are made up of particles produced by a waste treatment process that involves mechanical treatment. For example, all of the following are mechanical processes:

  • trommelling
  • crushing
  • screening
  • grading
  • soil washing

The lower rate will only apply to a qualifying mixture of material that consists entirely of fines where several requirements are met, in addition to the requirements in LDTA/4020 and LDTA/4030. You must be able to justify applying the lower rate to mixtures of fines disposed of at your landfill site.

Requirements

You must:

  • comply with the requirements set out in regulations 4 and 5 of the Landfill Disposals Tax (Administration) (Wales) Regulations 2018
  • comply with the Qualifying mixtures of materials: fines notice (‘fines notice’), published under section 17(5) LDTA

If all the requirements for qualifying mixtures and mixtures of materials: fines are not met and satisfactory evidence does not demonstrate the above, the ‘mixture of fines’ cannot be considered for the lower rate of tax and the standard rate should be applied.

LDTA/4050 Step 1: Pre-acceptance requirements

Pre-acceptance requirements

Visual inspections

When receiving mixtures of fines at the landfill site, you’re responsible for their inspection before accepting them. This inspection should ensure that the written description accurately matches the material delivered to site throughout the load.

Section 2.1 of the ‘fines notice’ requires a visual check of the mixture of fines; this can be done in several ways.

When approached by a potential new customer who wishes to deposit mixtures of fines to your landfill, the best approach would be for you to visit the waste producer’s site. This would provide you with assurance on the processes involved to produce the mixtures of fines.

You could also request the waste producer take photographs of the waste and make this available to weighbridge staff so that they are able to compare incoming mixtures of fines.

Example 1

When the load is on the weighbridge, overhead cameras can be used to look at the mixtures of fines, providing photographic evidence.

Example 2

When the load is deposited onto the landfill site, the person in charge of deposited loads could inspect the mixtures of fines as it is being tipped to ensure consistency with the waste description, potentially take photographs as evidence and act on any irregularity.

You should retain an audit trail to show that the mixture of fines has been inspected. This should be supported by the detailed description of the waste given in the pre-acceptance questionnaire and Duty of Care note.

Pre-acceptance questionnaire

Section 2.2 of the ‘fines notice’ requires a pre-acceptance questionnaire to be completed for each mixture of fines produced by a waste producer before the first load can be accepted at a landfill site. You should always keep this up to date and review regularly.

The pre-acceptance questionnaires will not routinely need to be submitted to us, but you’ll be expected to keep them on record. We can, however, request sight of these records as part of compliance checks as they will form part of the evidence of the tax rate applied by you. Where we do not request these records, you must provide them.

To request a template pre-acceptance questionnaire, please contact your customer relationship manager or email LDTmailbox@wra.gov.wales

If you operate across several sites, you’ll be responsible for determining how this information would be made available at each site. You should require waste producers to notify you of any changes that could impact on the tax liability. Where the waste producer disposes of more than one mixture of fines waste stream, you must obtain information and complete a questionnaire for each one.

Where no satisfactory questionnaire (or alternative information) is available, each mixture of fines waste stream disposed will be subject to standard rate LDT.

We may impose a record keeping penalty (up to £3000.for each mixture of fines waste stream).

Examples when a pre-acceptance questionnaire would need to be updated/reviewed

  • If the nature of the waste stream changes, for example seasonal changes may impact on input materials that are used to produce mixtures of fines. In these circumstances, you should review the information provided for the waste stream in the pre-acceptance questionnaire and require the waste producer to notify you of the change to the mixtures of fines input material.
     
  • If rates of disposals were greater than originally anticipated.
     
  • Where you would need to submit a loss on ignition failed test result to us, such as where:
    • the mixtures of fines was found to be hazardous;
    • there are indications the waste stream has changed

Example of a situation where someone other than the landfill site operator would authorise a completed pre-acceptance questionnaire

  • Your authorisation of pre-acceptance questionnaires may be performed by a centralised waste compliance team. This is possible where the information is made available on a landfill site operator system, notifying each site of the new waste stream or a change in an existing pre-acceptance questionnaire. The site would then be expected to comply with all other pre-acceptance checks.
  • There may be instances where a corporate group has been established for the purposes of a single tax return. It would be the responsibility of a representative member, on behalf of the group, for authorising pre-acceptance questionnaires.

Other pre-acceptance checks

It is your responsibility to satisfy yourself that the mixture meets the requirements in the legislation (as set out in LDTA/4030) before it can be treated as a qualifying mixture of materials. As such, visual inspections and pre-acceptance questionnaires are the minimum checks that you should carry out and, in some circumstances, it will be appropriate to do more due diligence to confirm the nature of the waste stream. In addition, other information may come to light which is relevant to whether the mixture is qualifying for the purposes of LDT. You should take all relevant information into account.

LDTA/4060 Step 2: Loss on ignition – related requirements

If a waste producer disposed of a waste stream with mixtures of fines across several sites, and there was a completed pre-acceptance questionnaire for this waste stream, the loss on ignition testing cycle would apply per site.

Frequency of testing - early, late or missed tests

We expect you to adopt the same sample preparation and methodology used since the introduction of the loss on ignition test in April 2015. This is set out in section 3 of the fines notice, which provides information and direction on when to do the first test and subsequent tests.

You may also wish to do tests at random, rather than at regular intervals or times, or even carry out occasional additional random spot checks as part of your managing requirements regarding disposals of mixtures of fines.

If you carry out a loss on ignition test late, such as after the required date, the date of the next test will be determined by the date at which the last test should have taken place (not the date it actually took place).

This is different from the approach taken in the rest of the UK where the date of the next test is calculated by reference to the date of the last test, even if this happened later than it should have.

Example: late test and implications for testing requirements

If a test should have been carried out at 1,500 tonnes and was not carried out until 2,000 tonnes, the date of the next test will be calculated from the 1,500 tonnes. The standard rate will apply to all loads entering the site when a loss on ignition test is outstanding and has not been done (such as in the example above, all loads entering the site from 1,500 tonnes until the point of testing at 2,000 would be subject to the standard rate.)

Example: contingency arrangement to avoid a late or missed test

You should have contingency arrangements in place in case of any complications with the sample, to ensure that you’re able to maintain the required testing intervals for the waste stream. For example, you might wish to test more frequently than every 1,000 tonnes, or you may have taken a second sample from the same load, kept at the landfill site. This would provide a buffer in case of a sample not being able to be tested.

Our power to carry out loss on ignition tests

The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 give us powers to:

  • direct that a landfill site operator carries out an independent loss on ignition test, and/or
  • take a sample and carry out a loss on ignition test, separately to the landfill site operator

If we direct you to take a sample and undertake a test, you'll be responsible for the cost of this. If we take a separate sample for testing, we would cover the cost of this. If the conditions of the original WRA loss on ignition test allowed for a re-test, you would be able to request that we re-test some of the same sample.

If we decide to undertake an independent loss on ignition test, it will adopt the same sample preparation and methodology as set out for you.

Loss on ignition tests

Section 3.3 of the ‘fines notice’ provides direction and information on:

  • the testing regime
  • what the test does
  • the frequency of testing
  • taking a sample
  • the test methodology (sample preparation and treatment); and
  • the loss on ignition calculation

You must take a large enough sample so that you can keep a ‘master’ sample and send another for testing. If you needed to do a retest, you can then provide another sample from the same taxable disposal and still comply with the requirements of the loss on ignition testing regime.

Any loss on ignition tests conducted by the waste producer or the landfill site as part of Waste Acceptance Criteria (WAC) testing do not override or replace your responsibility to meet our loss on ignition testing requirements.

LDTA/4070 Step 3: Loss on ignition reporting

Retesting

In the event of a failed loss on ignition test, section 3.4 of the ‘fines notice’ provides the conditions under which a re-test would be allowed. If the result of the re-test was 10% or less, the original test result may be ignored.

For loads where there has been a loss on ignition retest, the result would be reported in the accounting period for the retest date.

Failed loss on ignition tests

For failed loss on ignition test results, you’ll be required to provide information on what the failure relates to and the measures put in place to manage and reduce the risk.

Section 3.5 onwards of the ‘fines notice’ contains information on the details which you’ll be expected to record and keep for each loss on ignition test carried out, and additional information which will need to be recorded for a failed test.

Where a test has failed, it is important to review your pre-acceptance checks, update the pre-acceptance questionnaire and identify if the mixture of fines should be ‘high’ or ‘low’ risk. If this is not done correctly, there could be potential tax implications. The frequency of future testing may also need to change - you should refer to section 3.2.2 of the ‘fines notice’ on this.

To report a failed test please contact your customer relationship manager or email: LDTmailbox@wra.gov.wales to request a loss on ignition failed test result form. One form must be used for each failed test.

On or before the filing date for each tax return, you should send all completed failed loss on ignition test result forms and laboratory reports to us which are relevant to the tax period in which the test result was received. This should be sent separately to your customer relationship manager or email: LDTmailbox@wra.gov.wales

If you’ve sent off a sample to a laboratory in one accounting period but have not had the report back, you should note that test in your tax return. If the analysis reports a failure, you should request an amendment to your tax return.

LDTA/4080 Record keeping

You’re responsible for ensuring that you accurately declare the amount of Landfill Disposals Tax due on waste disposed at your sites. This includes keeping sufficient evidence to substantiate tax returns. You should be able and prepared to make all your records available to us, when we ask to see them. You must provide any information that we request about the sites taxable activities.

We may occasionally visit premises to review your records, accounting systems and business. These visits would usually be made by appointment, at a time convenient for you.

Examples of record-keeping time periods

3 months

At least 1kg of untested samples are to be kept for 3 months after the due date of the relevant Landfill Disposals Tax return. Best practice has shown that keeping the samples in airtight containers and/or freezers better protects their composition.

6 years

All loss on ignition test result forms whether digital or paper; pre-acceptance questionnaires; written descriptions; and loss on ignition retesting with evidence confirming any retests as set out in the ‘fines notice’.

For all other records related to mixtures of fines and loss on ignition testing (paper and digital)

You’ll be expected to keep them for 6 years from the day on which the tax return is made or, if the tax return is amended, 6 years from the date of amendment, in line with the Tax Collection and Management (Wales) Act 2016, sections 38-42.

If you keep digital records, rather than paper records, digital continuity arrangements will need to be in place to ensure that records are accessible for a minimum of 7 years.

LDTA/4090 Penalties

There are specific record-keeping penalties relating to mixtures of fines and loss on ignition testing.

A penalty could apply to:

  • a mixture of fines for not keeping an up-to-date pre-acceptance questionnaire for that mixture, as per section 2.1 of the ‘fines notice’; and/or
  • a taxable disposal for not carrying out a Loss on Ignition test as per section 3.3 of the ‘fines notice’,

You may be subject to a record-keeping penalty of up to £3,000 for not complying with either of the above requirements.

These penalties are set out in the Landfill Disposals Tax (Administration) (Wales) Regulations 2018, part 2, regulation 8 ‘Penalty for failure to comply with requirements relating to evidence’.

Below is a summary of your responsibilities for lower rating of qualifying fines, accompanied by the consequences of failing to comply. In all circumstances, if you’ve not declared the correct amount of tax, you may be liable to a penalty and interest on the undeclared tax.

Reference Requirement or condition Consequences of failure to comply
1 Landfill site operator must hold evidence that fines are qualifying fines Disposal is standard rated
2 The written description must be held and it must contain a description that identifies the material as qualifying fines Disposal is standard rated
3 Where WRA requests an additional loss on ignition test under para 3.2.5 ‘Directions to carry out LOI test’ of the ‘fines notice’ On failure to conduct the test, the disposal is standard rated
4 Landfill site operator must conduct the prescribed test to the prescribed frequency of testing for each waste stream From the date of the failure until the failure is put right, disposals are standard rated
5 Landfill site operators must undertake the prescribed test as set out in the ‘fines notice’ (selecting a representative sample; methodology and the prescribed standard loss on ignition test) From the date of the procedural failure until the failure is put right, disposals are standard rated
6 The landfill site operator must retain master (untested) samples of tested fines for a period of 3 months from the due date of the tax return so that it can be re-tested Liable to a penalty of up to £3,000
7 Landfill site operators must make and preserve the following for 6 years: 
  • evidence that fines are qualifying fines
  • a full record of LOI tests conducted, see section 3.5 of the ‘fines notice’ for details of the LOI test requirements
Liable to a penalty of up to £3,000 per disposal
8 The tested sample must meet the loss on ignition threshold Disposal is standard rated

LDTA/4100 Transitional arrangements

When consulting the guidance in this section, please read in conjunction with the Qualifying Mixtures of Materials: Fines Notice.

The notice sets out transitional arrangements in relation to ‘pre-acceptance requirements (section 2.2.1); ‘the first loss on ignition test’ (section 3.2.1.1) and ‘subsequent loss on ignition tests’ (section 3.2.2.1).

The following applies for landfill site operators currently registered for the purposes of landfill tax:

Pre-acceptance checks

Up to 1 April 2018, checking arrangements will be honoured as long as they are in line with the existing UK law and meet HMRC’s Excise Note LFT1 on pre-acceptance requirements. The landfill site operator will not be required to complete a new pre-acceptance questionnaire for a waste stream where waste fines have been received on a site before 1 April, even if they are disposed of after this date, unless the nature of the waste stream changes. The Landfill site operator will need to keep a copy of such questionnaires.

First loss on ignition test

If a landfill site operator conducted a loss on ignition test on waste fines before 1 April 2018 and the date of the test result is on or after 1 April 2018, this should be dealt with under the pre-existing arrangements as per The Landfill Tax (Qualifying Materials) Order 2015 and HMRC’s Excise Note LFT1.

Where waste fines have been brought onto the site before the 1 April 2018, the loss on ignition testing cycle should be carried forward i.e. the landfill site operator is not required to put in place a new loss on ignition testing cycle as directed under the WRA notice ‘Mixtures of materials consisting entirely of fines’.

Any waste fines delivered to the site from 1 April 2018 will need to be compliant with the LDT regulations. This is consistent and in line with other areas in LDTA, for example water, reliefs, non-disposal areas and registration.

If the WRA carries out any inspections involving any loss on ignition testing undertaken in April 2018, for waste fines delivered before April 2018, any consequences would be as for LDTA.

Subsequent loss on ignition tests

For all existing customers (waste producers) that produce waste fines, the loss on ignition testing cycle before 1 April 2018 would remain the same after 1 April 2018, as follows:

  • for existing customers, where there have been no failed tests for a particular fines waste stream, the testing cycle before 1 April 2018 will continue
  • for existing customers, where there has been one failed test for a particular fines waste stream before 1 April 2018 and a 2nd failed test result after 1 April 2018, the landfill site operator will be expected to move to more frequent testing arrangements in line with the Frequency of Testing table in the WRA Notice ‘Mixtures of materials consisting entirely of fines’, section 3.2.2
    So, for example, if there is one failed loss on ignition test on the mixture before 1 April 2018 and another failed test after that date, both failures must be taken into account. Where there are 2 failed tests within the last 20 tests, this will mean that one of the high risk indicators is present and that the next test must be carried out on the mixture at the interval specified in relation to high risk mixtures in the Table
  • For existing customers where there has been more frequent testing on a fines waste stream as per HMRC’s Excise Notice LFT1 ‘Frequency of Testing table’ cycle, this should continue until there have been 20 consecutive compliance tests. The low risk classification will apply unless the pre-acceptance checks or visual inspection indicate the fines waste is still high risk

HMRC’s Excise Notice LFT1 and the WRA Notice ‘Mixtures of materials consisting entirely of fines’ contain the same risk indicators (high and low) in the frequency of testing table which will allow a seamless transition to the new arrangements.

Test results will need to be submitted with the first online quarterly return for the tax year 2018/2019, alongside results of other tests during that quarter, in line with LDTA requirements and evidence retained as part of record keeping requirements.

Record keeping

Any loss on ignition samples held before 1 April 2018 but tested after 1 April should be kept for 3 months after the due date of the next LDT return, under the new record-keeping arrangements within LDTA and the Regulations.

Example of types of treatment process that could produce qualifying fines:

  1. The waste producer runs 2 separate lines, one for mixed waste from which the fines are not qualifying and are standard rates; and one for mainly qualifying waste with some non-qualifying material, from which the fines may be qualifying fines.
  2. The waste producer produces fines through their treatment process from mixed waste sources but then subjects it to a further fines treatment process which can remove the majority of the non-qualifying material to leave qualifying fines.
  3. However, if a waste producer shreds mixed municipal waste and subjects it to a basic treatment process, with no initial or further separation of non-qualifying material the waste would not be qualifying fines at this stage of processing.

LDTA/4190 Customer Insolvency Credit

This guidance provides an overview of the customer insolvency credit, the circumstances that give rise to the credit and the process for making a claim. It should be read alongside section 54 of the Landfill Disposals Tax (Wales) Act 2017 (LDTA) and Part 3 of the Landfill Disposals Tax (Administration) (Wales) Regulations 2018.

LDTA/4200 Entitlement to customer insolvency credit

Before claiming the customer insolvency credit, a landfill site operator or former landfill site operator (“the claimant”) must be satisfied that all of the following requirements are met:

  1. A taxable disposal must have been made at an authorised landfill site.
  2. The claimant must have been registered as the operator of the site at the time of the disposal, and the claimant must have either made the disposal or permitted the disposal to be made.
  3. Money must have been charged in relation to the disposal to a customer who is not (and was not at the time of the disposal) connected with the claimant. Whether a person is considered to be ‘connected’ to another is determined in accordance with sections 1122 and 1123 of the Corporation Tax Act 2010.
  4. The claimant must have issued a landfill invoice to the customer within 14 days of the date of the disposal (any longer period agreed by the WRA under section 41(6) LDTA in respect of the disposal. See LDTA/5040.
  5. The claimant must have already accounted for and paid the tax chargeable on the disposal.
  6. The customer must have become insolvent within the period of 12 months (beginning with the date on which the landfill invoice was issued) and must have failed to pay the whole or part of the consideration due in respect of the disposal.
  7. The claimant must have been unable to recover the unpaid consideration, despite having taken reasonable steps to do so.
  8. Before concluding that money remains outstanding from the customer, the claimant must have set off against the amount of unpaid consideration any debt owed to the customer and reduced the amount of unpaid consideration by the value of any enforceable security that they hold in relation to the customer.

Even if a claimant meets all of the above 8 requirements, they are not entitled to the customer insolvency credit if they have previously benefitted from any amount of customer insolvency credit in respect of the same taxable disposal.

LDTA/4210 Meaning of insolvency

For the purposes of claiming the customer insolvency credit, a customer will be considered to have become insolvent if they are subject to an insolvency event.

An insolvency event is one of the following:

  • a company voluntary arrangement
  • an administration order or the appointment of an administrative receiver
  • the commencement of a creditors’ voluntary winding up or a winding up by the court
  • a debt relief order
  • an individual voluntary arrangement
  • a bankruptcy order
  • any corresponding event that has effect under or as a result of the law of Scotland or Northern Ireland or a country or territory outside the United Kingdom.

LDTA/4220 Determining the amount of customer insolvency credit

Allocation of payments

For the purposes of determining whether there is a debt owing from the customer that can form the basis of a claim to customer insolvency credit and the amount of that debt, there are rules about how payments to and from the customer should be treated (Regulation 16 of the Landfill Disposals Tax [Administration] Wales Regulations 2018).

Generally, if a claimant receives payment from a customer (where the claimant made a taxable disposal on behalf of that customer and where a customer owes money for that disposal), the payment will be treated as allocated to that debt.

However, if a claimant has more than one debt outstanding from a customer and the customer makes a payment to the claimant, this payment should be attributed firstly to the oldest debt, then to the next oldest debt if there is a remainder, and so on.

No attribution should be made, however, if the payment was allocated to a specific debt by the customer at the time of payment and the debt was paid in full.

Where the earliest debt and the other debts to which the whole of the payment could be attributed arose on the same day, the payment shall be attributed to those debts by using the below formula.

Allocation = TP x (D ÷ TD)

  1. 'Allocation' is the amount of the allocation
  2. 'TP' is the total amount of payment to be allocated to the debts arising on that day
  3. 'D' is the amount of the particular debt in question
  4. 'TD' is the total amount of all of the debts which:
    1. arose on that day, and
    2. are owed by the customer to the claimant.

Calculation of amount of customer insolvency credit

The amount of customer insolvency credit to which a person is entitled to should be calculated in accordance with the below formula:

Credit = T x (OC ÷ C)

where:

  1. 'Credit' is the amount of the customer insolvency credit
  2. 'T' is the amount of tax which the person has accounted for in respect of the disposal in a tax return. Where the amount of tax accounted for in respect of the disposal is increased, the increase is to be ignored
  3. 'OC' is the amount of the outstanding consideration in respect of the disposal (having set off any debt owed to the customer and reduced the amount of unpaid consideration by the value of any enforceable security)
  4. 'C' is the consideration for the disposal.

Where the amount of tax chargeable on the disposal is less that the amount of tax accounted for in respect of the disposal (ignoring any increase):

'T' is the amount of tax chargeable on the disposal.
'C' and 'OC' are each to be reduced by an amount equal to the difference between the 2 amounts of tax.

LDTA/4230 Claims by landfill site operators

The landfill site operator is satisfied that they meet all the requirements set out at LDTA/4200, a claim to customer insolvency credit may be made in a tax return in respect of the first qualifying accounting period or any subsequent accounting period.

The first qualifying accounting period is that in which the 6-month anniversary of the date of the relevant insolvency event falls. The relevant insolvency event is the first insolvency event that occurred in relation to the customer.

The claim is made by setting off the amount of the credit against the amount of tax that person would otherwise be required to pay under section 42(1) of LDTA.

Where the total credit claimed exceeds the total tax due for the accounting period, WRA will repay the landfill site operator an amount equal to the excess. The WRA will only pay the remaining amount if all tax payments are up to date and if every tax return that the person is required to make in respect of the tax has been made.

LDTA/4240 Claims by other persons

Provided that a formerly registered landfill site operator is satisfied that they meet all of the requirements set out at LDTA/4200 they may claim the credit by making an application to the WRA in writing. The application may not be made before the expiry of the period of 6 months beginning with the date of the relevant insolvency event. The WRA will only pay if satisfied that:

  • the person is not registered
  • the person is entitled to the credit, and
  • the entitlement to the credit has not been transferred to any other person

LDTA/4250 Evidence in support of claims

When making a claim for customer insolvency credit, the landfill site operator must hold the following records:

  • a copy of the landfill invoice that they issued for the taxable disposal
  • records or other documents showing that they have accounted for and paid tax on the relevant disposal
  • records or other documents relating to any payment made by the customer in respect of the consideration for the disposal
  • records or other documents relating to any debt owed by the landfill site operator to the customer or any enforceable security held by them in relation to the customer
  • records or other documents relating to any steps taken to recover the outstanding consideration for the disposal

This evidence does not need to be submitted to the WRA when making a claim, but the evidence must be preserved for a period of 6 years beginning with the day the claim was made and the WRA may ask to see it.

LDTA/4260 Customer insolvency credit record

When a claim is made, the landfill site operator must make the record of that claim and keep the record up to date. It needs to be maintained for 6 years from the later of the day on which the claim was made or the day on which the record of the claim was most recently updated

A customer insolvency credit should contain the following information in respect of each taxable disposal to which the claim relates:

  • the amount of tax chargeable on the disposal
  • the consideration for the disposal
  • the return in which that tax was accounted for and when it was paid
  • the date and identifying number of the landfill invoice that was issued
  • in the case of a disposal of material for which a written description is required by virtue of section 34(1)(c)(ii) of the Environmental Protection Act 1990(1), the written description
  • any payment or other consideration received, whether before or after the landfill site operator makes the claim
  • any steps taken to recover the outstanding consideration for the disposal

The return must also contain the following information:

  • the total amount of the claim
  • the tax return in which the claim was made
  • the total amount of outstanding consideration in respect of which the claim is made
  • where if more than one claim is made by the same claimant, the customer insolvency credit records required for each claim be kept in a single account (known as the ‘customer insolvency credit summary’)

LDTA/4270 Recovery in the event of customer payment

If a landfill site operator has benefitted from a credit for customer insolvency credit and they subsequently receive any payment from a customer that is treated as attributed to the relevant disposal they will have to make a payment to the WRA.

The payment needs to be made before the end of 30 days beginning with the day on which the claimant received the payment from the customer.

The amount that needs to be paid by the claimant to the WRA should be calculated using the below formula:

Payment = RCredit x (P ÷ OC)

where:

  1. 'Payment' is the amount of the payment that must be made to the WRA.
  2. 'RCredit' is the relevant amount of customer insolvency credit.
  3. 'P' is the amount of payment that is treated as being allocated to the debt owed in respect of the consideration for the disposal.
  4. 'OC' should be calculated using the formula above in ‘calculation of amount of customer insolvency credit’.

Example

Amount of credit claimed - £41.81
Payment received - £20.00
Amount of debt outstanding - £92.50
Amount repayable = £41.81 x £20/£92.50 = £9.04

LDTA/4280 Recovery in the event of failure to keep records or other evidence

Where a claimant has benefitted from customer insolvency credit but has failed to comply with the requirements to keep records and other evidence, WRA may recover the amount of customer insolvency credit claimed.

To do this, the WRA must do the following:

  • Assess the amount of customer insolvency credit claimed
  • Issue a notice to the claimant that specifies the amount assessed and requires the person to pay that amount to the WRA

The claimant must pay the required amount within 30 days beginning with the day on which the notice is issued.

The claimant is not required to pay the amount issued in the notice in the following circumstance:

  • if the claimant provides other documentary evidence (within 30 days beginning with the date on which the notice is issued) that prove the facts that the records (as detailed at LDTA/4250 and LDTA/4260) would have shown, and
  • The WRA issues a further notice to the claimant stating that this documentary evidence is sufficient evidence